Resuscitating industrial research without monopoly money

Butler replies: Michael Riordan correctly points out that AT&T could, as a monopoly, justify funding basic research at Bell Labs, something it could no longer do after its breakup. Although the results of that research did have enormous impact on modern life, Stephen Adams and I discovered, while writing Manufacturing the Future: A History of Western Electric (Cambridge University Press, 1998), that the impact was frequently delayed. Monopolies could fund basic research as good corporate citizens, in part because they could spread out the deployment of results to ensure adequate returns on disruptive innovations. As a monopoly, AT&T often waited to introduce the innovations created at Bell Labs. In the 1950s the average product life cycle at AT&T was on the order of 20 years. Under competitive pressures after 1984, that life cycle, we were told, shrank by 1996 to about six months and sometimes pushed to three months.

After 1996 Bell Labs, as a part of Lucent Technologies, might immediately develop innovations it created, but it lacked the funds to maintain the level of research it had under the AT&T monopoly. After the loss of monopoly status, competition pushed innovations into the marketplace at a far faster rate, but those innovations became increasingly incremental rather than transforming the technology.

Larry Sumney and Ralph Cavin reflect the views of the one industry that our study found to have successfully resolved the tensions in the research nexus involving industry, government, and academia. Research sponsored by microchip industry consortia is industry driven rather than government or university driven and is largely limited to “precompetitive” research—that is, research to improve the products of the industry as a whole without giving advantage to any single corporation or group of corporations. Microchip industry consortia have resolved the intellectual-property tensions between corporate interests and universities by requiring a royalty-free license to members for any research funded by the consortium. A university, however, retains the right to sell that intellectual property to those outside the consortium. Whether or not industry-wide, consortium-led research would work in all high-tech industries remains to be seen. However, Semiconductor Research Corp and other microchip industry consortia provide a good model for one way to resolve the tensions frequently underlying government-driven university and industry collaborations.